£3.7bn frigate contract 'designed to protect against cost overruns'

A £3.7bn contract to build the first three of the Royal Navy’s Type 26 Frigates has been drawn up to protect against rising costs.

Defence secretary Sir Michael Fallon announced the signing of a contract for BAE Systems to build the three frigates on the Clyde, where the first metal is to be cut for the ships next month.

He said: “The contract is structured to ensure value for taxpayers’ money and, importantly, now designed to protect them from extra bills from project overrun.”

The MoD added: “The contract is specifically structured to motivate both sides to deliver to a successful outcome where both parties share in the pain and gain in the delivery of the programme.”

So far the contracts are expected to secure approximately 1,700 skilled shipbuilding jobs in Scotland and 1,700 jobs throughout the supply chain across Britain until 2035.

Pledges to build the frigates on the Clyde were made by former prime minister David Cameron in the run-up to the Scottish independence referendum.

Since then the project has been hit by delays and original plans to build 13 frigates have been cut back to eight.

The MoD added that the contract for the second batch of five ships is set to be negotiated in the early 2020s.

Fallon said the Type 26 would be the most advanced anti-submarine warfare ship in its class around the world and that the MoD was exploring potential export opportunities.

He said one of the key roles for the frigates would be to protect the nation’s nuclear submarines and the Royal Navy’s new aircraft carriers, the first of which, HMS Queen Elizabeth, has recently taken to sea for the first time.